Legal development

Australian electricity and gas markets – August 2024 Update

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    In our August update, we take a look at the latest rule changes and market updates affecting participants in the Australian electricity and gas markets.

    What you need to do

    Stakeholders should note the market updates below, and note any impacts on their compliance obligations.

    National Electricity Rules 

    On August 1 2024, the Australian Energy Market Commission (AEMC) released its final determination and more preferrable final rule on its Managing ISP project uncertainty through targeted ex post reviews rule change. Under the final rule:  

    • the Australian Energy Regulator (AER) will only conduct an ex post review of an Integrated System Plan (ISP) project where the project is substantially complete and exceeds its forecast capex; 
    • the AER will only conduct an ex post review of a non-ISP project where the capex incurred on all non-ISP projects exceeds their forecast capex during the review period;
    • the review period for ISP projects will be extended from the last five years to all years in which capex is incurred;
    • the AER's power to exclude capex from a Transmission Network Service Provider's (TNSP) regulatory asset base (RAB) for an ISP project is limited to the level of project overspend determined by the AER not to meet capex requirements;
    • the AER's power to exclude capex from a TNSP's RAB for a non-ISP project is limited to the level of overspend:
      • above the capex allowance for all non-ISP projects;
      • within the five-year review period for non-ISP projects; and
      • determined by the AER not to meet the capex criteria;
    • the AER may adjust a TNSP's future revenue allowance to offset existing penalties under a capital expenditure sharing scheme (CESS); and
    • the AER will amend its Capital expenditure incentive guideline and use this to guide CESS adjustments for projects not yet subject to a CESS. 

    The final rule commences on 4 September 2025

    On 8 August 2024, the AEMC released its draft determination and more preferable draft rule on its Shortening the settlement cycle rule change. The draft rule shortens the national electricity market (NEM) settlement cycle from 20 business days to 11 business days. 

    Under the draft rule, the 11 business day settlement cycle will be implemented from 30 April 2026.

    Stakeholders are invited to submit feedback on this draft rule by 3 October 2024

    On 15 August 2024, the AEMC released its final determination and more preferrable final rule on its Unlocking CER benefits through flexible trading rule change. The rule change: 

    • allows large customers to trade with multiple energy service providers by establishing a secondary settlement point at their premises, as the preferred alternative to:
      • using embedded networks; and
      • establishing secondary physical connections;
    • allows for separate metering of flexible consumer energy resource (CER) loads as distinct from passive consumer loads in the energy market; and
    • adds three new meter types that allow market participants to use technology with in-built measurement capabilities, such as electric vehicle chargers and streetlights, during the billing and settlement process.

    The AEMC has set an implementation date of 1 November 2026 for the majority of the new rules. However, it expects the in-built metering rule changes to be implemented by 31 May 2026

    On 22 August 2024, the AEMC released its draft determination and more preferrable draft rule for its Retailer reliability obligation exemption for scheduled bi-directional units rule change. The rule change: 

    • defines 'exempt market connection points' to include connection points for: 
      • market generating units;
      • market bi-directional units; and
      • pumped hydro energy systems;
    • provides that exempt market connection points are not liable under the Retailer Reliability Obligation (RRO); and
    • provides an RRO exemption for connection points comprising:
      • a battery and generating unit without any other load; and
      • a battery and load centre with a total annual electricity consumption less than 10GWh. 

    Stakeholders are invited to provide feedback by 10 October 2024

    National Energy Retail Rules

    On 15 August 2024, the AEMC released its final determination and more preferrable final rule on its Unlocking CER benefits through flexible trading (retail) rule change. 

    The rule change supplements the related change to the National Electricity Rules (NER) by defining the rights and obligations of retailers in respect of secondary settlement points and associated meters.

    National Gas Rules

    No gas rule change requests were initiated in August 2024. No AEMC determinations relevant to the National Gas Rules were published.

    Other Updates

    The AEMC is seeking feedback on its:

    The AER is seeking feedback on its: 

    The Australian Energy Market Operator released its Engineering Roadmap – FY2025 Priority actions report for the NEM on 15 August 2024. The Report groups its 37 priority actions across three focus areas: 

    • delivering foundational transition enablers (e.g. integration and governance for distributed energy resources);
    • providing long-range investment visibility (e.g. future-state energy system and technology requirements); and
    • progressing operational readiness (e.g. Real-Time Operations, operations support, and transition planning).

    Authors: Dan Brown, Partner; Dale Gill, Partner, Paul Newman, Consultant, Carl Franzmann, Graduate and Ethan Low, Paralegal. 

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.

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